Part 1 The Year in Review by the Chairperson, Dr Ian Douglas
This annual report marks the twenty-seventh year of operations of the International Air Services Commission (the Commission). It is my pleasure to provide an overview of the activities of the Commission for the last 12 months.
The Commission remained busy dealing with a total of 75 applications resulting in 32 decisions varying a range of determinations, 26 renewals of capacity allocations, 12 determinations allocating new capacity, three resolutions and one revocation of a determination (at the request of the carrier concerned). While most applications were straightforward, the application by Qantas to code share with Cathay Pacific on the Hong Kong route was more complex and contentious. Several submissions were received, requiring significantly more detailed work by the Commission. At the writing, the Commission was awaiting a further response by Qantas to the consideration of the draft decision.
The Commission held a total of 20 meetings during the year. While some meetings were conducted face-to-face in Canberra, the Commission carried out its work by teleconference or by email, wherever possible.
This financial year saw a full year’s implementation of the new Policy Statement made by the Minister in March 2018. The Policy Statement sets out the criteria which the Commission is required to apply in assessing the benefit to the public of applications by Australian airlines for allocation of capacity.
International passenger traffic for the year ended April 2019 increased by 4% to 41.9 million passengers. While growth has been constant, March 2019 showed the first year-on-year decrease in international passenger traffic since March 2011. Airline seats operated increased by 2.9% in the year to April 2019, with load factors up by 0.3 percentage points to 79.8%.1
Looking at calendar year 2018, 63 international scheduled airlines operated to and from Australia, with additional airlines represented through code share arrangements. Of the 63, five operated dedicated freight services. The capacity offered (seats operated) by the international scheduled airlines in 2018 totalled 53.9 million seats, on which 41.6 million passengers were carried.2
Australian designated airlines increased their share of the traffic from 31.5% in 2017 to 32.2% in 2018. Qantas Airways had the largest share of the market in 2018 with 17.1% followed by Jetstar Airways with 8.9%, Singapore Airlines with 8.0%, Emirates with 7.7%, Air New Zealand with 6.6%, and Virgin Australia with 6.2%.3
In financial year 2018–19, the Commission issued 12 determinations allocating new capacity (up from 9 new allocations the previous year) and 26 determinations renewing capacity allocations. Qantas applied for and was issued additional capacity for services to Chile, Cook Islands, Fiji, Indonesia, New Caledonia, Philippines and South Korea. Qantas sought renewal of its capacity allocations on Japan, Indonesia and Singapore in relation to passenger capacity and on China, Singapore and Thailand for all-cargo capacity. Virgin Australia sought the renewal of capacity allocations for operations of scheduled passenger air services to Cook Islands, Fiji, Indonesia, Papua New Guinea, Solomon Islands, South Korea, Tonga, Vanuatu; and for all cargo services, on the New Zealand and USA routes.
The Commission conducted 33 reviews of determinations at the request of the airlines, with 32 reviews resulting in decisions granting the requested variations. An application by Qantas to permit Cathay Pacific to code share on selected flights operated by Qantas on the Australia-Hong Kong route is still under consideration.
The participation of Australian carriers on international air routes out of Australia varies significantly. The China route is largely served by Chinese carriers, and over the last 10 years, the route has seen constant growth. In the 2009 northern summer scheduling period three Chinese carriers (Air China, China Eastern and China Southern) operated on the route. A fourth carrier commenced operations between Chengdu and Melbourne in 2013. In 2019, nine Chinese carriers serve the route, operating from various Chinese cities to various points in Australia, while Qantas continues operations to Shanghai and Beijing. Virgin Australia has been granted capacity by the Commission to operate on the China route, but is yet to commence operations.
Other routes with limited service by Australian carriers include Malaysia, India, Canada, and Korea. In these cases code share agreements, or connectivity at intermediate points support the market presence of Australian carriers.
On 4 May 2019, I completed my first term as Chair of the Commission and I am pleased to report that the Governor-General extended my appointment for a further period of 12 months.
As we review our performance during the year, I would like to thank the Executive Director, Ms Marlene Tucker, and her small team in the Secretariat for their valuable advice and assistance in ensuring that the Commission functions smoothly and efficiently.
I would also like to thank my fellow Commissioners, Ms Jan Harris and Ms Karen Gosling. Their skill and experience were essential to the work of the Commission in this busy year.
Dr Ian Douglas
1 Information sourced from the Bureau of Infrastructure. Transport and Regional Economics (BITRE)
2 Bureau of Infrastructure, Transport and Regional Economics (BITRE) Statistical Report, Aviation International airline activity 2018
3 Bureau of Infrastructure, Transport and Regional Economics (BITRE) Statistical Report, Aviation International airline activity 2018